Dell chalks out new BPO offerings, takes on Indian outsourcing firms

MUMBAI: In a bleak environment where unemployment and sensitivity around offshoring are hurting the business process outsourcing (BPO) industry, IT giant Dell is readying an ambitious foray that will pit it against Indian outsourcing rivals in some of the largest back-office processes outsourced to third-party providers.

Once known for desktops and laptops and its direct selling business model, Dell has been beefing up its services portfolio by adding offerings since diversifying into software services by acquiring Perot Systems.

Ashutosh Vaidya, who joined Dell from Wipro to head its third-party BPO services nine months back, is adding final touches for the launch of four new backoffice services -- finance and accounting, procurement, customer interaction services and analytics -- slated for next quarter.

Customer services is the largest constituent of BPO exports from India and software industry body Nasscom estimates it will account for nearly 42% of all BPO exports from the country in 2012.

Finance and accounting services is the second largest segment comprising 22% of all BPO exports, followed by knowledge services - of which analytics is a part --and other services such as procurement.

Dell already runs a large-size shared services centre, which carries out accounting, procurement and other services for its $60 billion business. "This is what we do for ourselves. So we thought, 'why not leverage the capability to take it to market?" Vaidya said. Dell's existing BPO business focuses on healthcare and insurance, growth but niche areas.

Dell inherited the BPO business from Perot, which itself acquired it through buys in the healthcare insurance, physician, hospital, and life insurance outsourcing businesses. Since Perot, Dell has not made a significant acquisition in BPO services but Vaidya said the technology major was now looking to build these new businesses through acquisitions and through organic growth.

"We will acquire for new markets, new processes and new geographies. Obviously, the four focus areas will be our choice for acquisitions but we would also be open to acquiring in our strength areas (healthcare and insurance) and in others," he said.

Vaidya, who was last heading Wipro's BPO business, delivered more profit growth for the division in the years following the 2008 recession. "One of the challenges for BPO firms is companies are finding it difficult to grow. But with Dell having a presence in so many markets and a strong brandname, we don't see customer access as challenge," Vaidya said.Dell's New BPO PUSH

To start with, Dell plans to target existing customers for the new BPO services. It will also leverage existing staff for functions such as initiating a dialogue with the customer and drawing up the work contract, hiring only for the BPO functions. "All Dell assets will be used. Account executives who know the customer will do the job of opening doors after which BPO practitioners will engage with the customer. Finally, the accounts team will close the contract," Vaidya said, adding that the preliminary scoping out of customers has already been done.

"Dell's pool of customers is very large, so the potential is huge. Even if I tap a portion of it, it is enough to whet the appetite for a few years," he said. The launch of the new service lines will also provide a career path to BPO executives who are currently working in the internal functions of Dell and would like to shift to servicing other customers.